Sir Menzies Campbell has resigned as Liberal Democrat leader, it was announced tonight.

The shock move was announced by the party president, Simon Hughes, and the deputy leader, Vincent Cable - fuelling speculation that Sir Menzies had been forced out.

In his letter of resignation, released shortly after the announcement, Sir Menzies said: "It has become clear that following the prime minister's decision not to hold an election, questions about leadership are getting in the way of further progress by the party. Accordingly, I now submit my resignation as leader with immediate effect."

The move followed intense speculation about the 66-year-old's future after dire poll ratings for the party, which have barely reached double figures in recent days.

In a statement outside the Liberal Democrat headquarters in London, Mr Hughes said: "Sir Menzies Campbell has this evening submitted his resignation with immediate effect."

He said Sir Menzies had brought "huge stability and purpose to the party" and had successfully prepared the party for a general election "whenever it comes".

Sir Menzies had taken the decisions "in interests of the party", Mr Hughes said, adding: "Every Lib Dem and many other people owe him huge debt of gratitude."

Mr Hughes was flanked by Mr Cable, who will take over at the head of the party until a long-term replacement is found.

A timetable for the leadership contest will be announced tomorrow.

Mr Cable said: "During his time as leader, Ming has earned the respect, affection and gratitude of the party. This was reflected in the warmth with which his speech was received by the party conference three weeks ago."

That Sir Menzies did not make the announcement himself was seen by some at Westminster as an indication that he had been forced out by the party.

A friend of Sir Menzies told Guardian Unlimited: "This was a very personal decision taken after much reflection. He has been thinking about the decision ever since Gordon Brown took his decision [not to hold a general election]. That was the moment to think about things, talk to one or two people and weigh up whether he wanted to do this."

Mr Hughes did little to quell speculation about Lib Dem confidence in the incumbent leader when he said over the weekend that Sir Menzies "has to do better".

Some members are said to favour a younger, more dynamic leader such as the home affairs spokesman, Nick Clegg, or the environment spokesman, Chris Huhne, now that Gordon Brown has said an election is not likely until 2009 at the earliest.